Credit rating agency KBRA has downgraded Conifer Holdings and its subsidiaries credit ratings, and revised its negative outlook to stable.
Conifer Insurance Company (CIC) financial strength ratings (IFSR) were downgraded to BBB from BBB+ for, and to BBB- from BBB+ for White Pine Insurance Company (WPIC) (together, referred to as Conifer).
Additionally, KBRA downgraded the issuer rating of Conifer Holdings to BB from BB+ as well as the rating of CIC’s surplus notes to BB+ from BBB-.
“The downgrades reflect the continuation of poor underwriting results in the first nine months of 2023 that have fallen short of management projections provided to KBRA as well as the declining trend in risk-adjusted capitalization. Underwriting results at WPIC have caused surplus to decline to $15.3 million, a 26% decrease from year-end 2022,” KBRA stated.
Adding: “CIC reported a combined ratio of 128.2% for the period, compared to 115.1% for the similar period in 2022. The downgrades also reflect the negative impact to Conifer’s earnings diversification and market position given the anticipated significant reduction in the size and scope of operations related to the sale of the security guard and alarm installation business in late 2022 and the recent decision to exit the low-value dwelling homeowners business in Oklahoma.”
The rating agency expects that, in line with its business plan, Conifer will improve risk-adjusted capitalization and operating performance.
Additionally, KBRA expects both companies will maintain their high credit quality investment portfolios, robust reinsurance programs with strong counterparties and disciplined approach to expense management.
“The ratings reflect the organisation’s niche market expertise, pricing flexibility, adequate but declining risk adjusted capitalization, and conservative investment portfolio,” KBRA noted.
Conifer underwrites specialty insurance products which include property, general liability, liquor liability, commercial automobile, and low value dwelling policies to unique and potentially underserved market segments.
It is also licensed to write insurance on both an admitted and excess and surplus basis; this allows the company to be flexible in a variety of markets and pricing scenarios.
